What happened
Xiaomi has decided to cut its losses and shut down its messaging (IM) app MiTalk. According to MiTalk, the app’s servers will close permanently on February 19. Ironically, on the same day Xiaomi announced the shutdown, Tencent disclosed “an ambitious vision for WeChat,” according to Pandaily. MiTalk, however, isn’t the only messaging app to lose market share against WeChat. In fact, the Tencent-owned app has crushed various competitors, including EasyChat, or Yixin (易信), Matong (马桶) and Kouxin (口信). And despite their best efforts, none have been able to match up to Tencent’s super app.
Jing Take:#
Competition is stiff in each of China’s market sectors. And yet, in the last decade WeChat has managed to achieve market dominance, continuing to expand its services and revenue — all the while competitors were accused of violating antitrust laws and building monopolies.
Interestingly enough, since November, when the State Administration for Market Regulation (SAMR) drafted “anti-monopoly” rules that targeted big tech companies, only Alibaba has been on the receiving end of the government’s ire.
With its strong ties to the Chinese government, the independence of the platform is also debatable, considering that the app is subsidized by the government, and content is monitored by Beijing. Many sources have reported that they’ve been locked out of their accounts just because they used “sensitive words” or covered political events. Basically, WeChat has become a censorship machine, whom many believe spies on its users. And its efforts have been rewarded with “immunity.”
Having said that, WeChat is clearly seen as a monopoly. And the concept has been reinforced last September when US Magistrate Judge Laurel Beeler temporarily blocked President Trump’s executive order restricting Americans’ use of WeChat. In the analysis, the judge assessed that the Chinese-speaking and Chinese-American community has no other viable option than WeChat.
“But the plaintiffs’ evidence reflects that WeChat is effectively the only means of communication for many in the community, not only because China bans other apps, but also because Chinese speakers with limited English proficiency have no options other than WeChat,” the judge said. Basically, the expat community doesn’t have another option than WeChat. And now it seems, neither does the Mainland.
The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.